False signals, and need for trans-Pacific shared civilization

False signals, and need for trans-Pacific shared civilization

Most of the world suffers from a combination of recession and inflation. This is true despite unsophisticated readings of so-called growth statistics (really spending stats) showing sometimes negative and sometimes meager upside numbers. 

To my mind, this is the case certainly for the US and China, which are now and have been for much of the time since both governments instituted the draconian policies of shutdowns, lockdowns, and experimental quasi-medical, partly political research, all adding up to spending that signifies negative real national utility but only rarely, if at all, “good” growth numbers.

About 70 different varieties of mushrooms glow in the dark with a cold light that chemically (the enzyme is called luciferase) is very much like the light produced by fireflies. However much a venturesome hiker walking through the woods on a romantic midnight stroll might be tempted to pick and eat one of these luminescent temptations, Omphalotus olearius, called the jack-o’-lantern, the one that looks and even smells like the famous chanterelle variety, would make a fatal mistake: It is deadly poisonous.

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My metaphor here is that the eerie blue-green glow that comes off some of the economic numbers these days, particularly those for national income, is a false signal if we take it to show good health. National income statistics simply reflect spending, and spending can be healthy and productive or dangerous to the point of being an economic narcotic – or even poison.

National income statistics simply measure spending. The spending might be constructive and healthy: Perhaps some family is building a new house, or an investor is putting up a new factory. Other spending, public or private, might be foolish, politically imprudent, or simply wasteful.

Such has been the case during the Covid episode and the wild experimentalist attitude governments took on as they spent vast sums to combat the pandemic. We know now that lockdowns, slowdowns and many false starts inventing cures that went nowhere were compiled into the statistics as if they were the equivalent of constructive house building, factory construction or food production.

Indeed, some of the spending was so reckless and improvident that it contributed no real value to the economy, but set up a tumbling domino role of consequences, and it spread losses and encouraged erroneous expenditures elsewhere in the economy.

Over-anxious parents with school-age children masked them to the point where kids wearing eyeglasses could not see the lesson board. But without the mask, kids (who were practically immune to the virus) were denied places in schools. Medical laboratories had to chase mistaken ideas as well as good ideas in their politically directed search for cures that could not pass the cost-benefit test.

Shared strategies

So is there any common strategy shared on both sides of the Pacific that can address this shared problem of recession and inflation? Yes, and part of the strategy is simple: Get rid of international regulations that needlessly or politically impede trade and the movement of people, goods and money. The other is the more profound cure. Let us deeply and profoundly search for areas of common national interest, and let us adopt those actions as soon as possible.

It is an idea that would help support a better future of both East and West, an improvement having the potential for better policy outcomes that could last for generations, long after the current economic disturbance has passed.

It is an idea that will require our leaders to have the courage, foresight and wisdom of Julius Caesar – even surpassing his gifts – but the gains could be even greater than the garlanded one achieved.

The most important part of my superficially simple cure is what not to do during this time of unrest and uncertainty, a time when the winds that blow from the ancient city of Kiev smell of burning munitions.

“War is [almost always] a mistake,” said Stephen Kotkin, biographer of Josef Stalin.

I have added the weasel words “almost always” to the statistically, probabilistically correct version of Professor Kotkin. Consider the human cost of the big wars that filled almost the entire 20th century, Wars I and II: 60 million plus 85 million (skipping over the 100 million who died in the ideological settling of scores that occurred along with the actual fighting).

It burned along, at times only hot coals, from 1914 until 1990, when the undigested (undigestible) conquests of the defeated and unraveling Soviet empire were returned to individualized sovereignty. 

The great exception to the Kotkin rule is Caesar, a once-in-a-millennium rarity who ended Rome’s civil wars, and setting the stage for the links (including Christianity, law, language, culture, architecture, civil engineering, the month of July and the 365¼-day year) that remain with us 2,000 years later. 

He did so at the price of losing the fact but not the idea (because he was a mere authoritarian and not a totalitarian) of the Republic: Perhaps the long Roman Peace that succeeded him (given the numbers above showing the cost of Europe’s civil war, as I call it, makes his price, in cost-benefit terms, acceptable.

For him, it could be said “war is the father of all things” (Heraclitus). But so far, it is for him and none other.

The problem is that quite possibly some of today’s leaders may think themselves to be Caesars. There is one case in point; in Ukraine he is paying a high price for his self-deception.

But while I show respect for almost all the current world’s leaders while I say so, there is not a Caesar among them.

Moreover, although it is commonplace to say it, I will say it: A renewed (for so it would be because there is unfinished business) worldwide civil war would, could finally destroy the common civilization that Caesar and the unknown genius who “invented” the Chinese language and therefore culture bestowed on us.

Sometime between the 12th and 18th centuries BC, Chinese writing (and the so-far immortal culture built around it) was even than capable of recording history, stories for entertainment and instruction, laws and proclamations, and eventually including the wisdom of Confucius.

It was the foundation of a literature that still can be read. It is the core of the great independent Eastern culture that can be, must be allowed to form its just part of the trans-Pacific cooperative that will allow, with luck, a continued long-run life for the millions upon millions of our descendants who may never get a Caesar to hammer something out of the chaos that will mark our failures.

During his war with Pompey, at a critical moment after he was forced to set fire to most of his big ships while he was landed on the enemy (eastern) shore of the Adriatic to prevent them from being seized by Pompey, Caesar was forced to attempt a dangerous winter crossing of the sea back to Italy using only a frail bark of a boat, whose sailors were deeply (and rationally) afraid to make the trip. “Have no fear,” said the great man, “for your passenger is Caesar and his good luck.”

As it happened, even he later reconsidered, since he could find a partner from the Roman side of the water with whom he could meet halfway and thus ensure safe passage. 

Today’s leaders in China and America must be bolder than even was the divine Caesar. 

After all, each need only reach halfway across the Pacific, wider than the Adriatic, but now the prize is greater: not war but self-interested partnership, or at least a mutual recognition that their Venn diagrams of national interest do have some points in common, and that the lessons to be drawn from the current war in Ukraine show that the fog of war makes it impossible to know what if any are common points of interest that might have ever existed between the combatants.

What we have then are two mighty systems: ours, still roughhewn in places; theirs, an ancient river of words reaching back into the high mountains of their complex ancient past.

That system was already two thousand years of age when Caesar was in his cradle, giving warnings and guideposts, poems and dreams but sometimes distrustful and suspicious, remembering hard-taught lessons of the risks that lurk on the other side of the wall. Somehow the two systems must find cooperation and mutual respect. If not, then certainly after us comes the deluge.

In this essay, I am Jeremiah: I warn, but I do not, I cannot (because I am no more Caesar than is any man of our time) know how to solve our current potential civil war. I only know we, on opposing sides of the Pacific, are in charge

If we fail in our duty to find a way to live together in terms of the places where our Venn diagrams overlap, history and historians (if any such things remain) will never forgive us.

Tom Velk is a libertarian-leaning American economist who writes and lives in Montreal, Canada. He has served as visiting professor at the Board of Governors of the US Federal Reserve system, at the US Congress and as the chairman of the North American Studies program at McGill University and as a professor in that university’s Economics Department.